The euro bounced back on Tuesday, as support from China's Vice Premier over
the EU's handling of the debt crisis saw the currency rise against 14 of its
16 most traded counterparts.

Speaking at a one-day economic relations and trade forum in Beijing, Wang Qishan said that China supported the European Union's efforts to try and take control of Europe's spiralling debts.

He said that the EU and IMF had "taken concrete action to help some EU members counter the sovereign-debt crisis.”

The euro rose 0.36pc against the dollar to $1.317 on Tuesday morning, and edged up 0.26pc against the yen to 110.20, after falling to its lowest level in two weeks on speculation some European nations will struggle to raise funds amid a raft of credit-rating and outlook changes.

Chinese Premier Wen Jiabao said in October that China supported a stable euro and wouldn't reduce European bond holdings. “EU members have taken a number of steps to actively respond to the sovereign-debt crisis,” Wang said. “We hope these measures will quickly produce results and lead to a steady recovery of the EU economies.”

Euro members Greece and Ireland were rescued by their neighbours and the IMF this year, with investors now concentrating on Portugal as another possible bail-out recipient.

Moody’s Investors Service on Tuesday placed Portugal's debt rating under review for a possible downgrade.

"In Moody's opinion, Portugal's solvency is not in question," Anthony Thomas, Moody's Vice President and lead analyst for Portugal said. "But the likely deterioration in debt affordability over the medium term and ongoing concerns about the economy's ability to withstand fiscal consolidation and private sector deleveraging mean its outlook may no longer be consistent with an A1 rating."

The ratings agency last week cut Ireland’s rating by five levels and put Greece on review for a possible “multi-notch” downgrade. Standard & Poor’s is reviewing its assessments of Ireland, Portugal and Greece.

China, which holds a record $2.65 trillion in foreign-exchange reserves is the EU's largest trade partner, with bilateral trade increasing 33.1pc in the 11 months through November from a year earlier to $433.9bn.